The Markets
Nobody likes to balance the budget.
Some pundits said Moody’s rating downgrade of U.S. Treasuries was a nothing burger.1 After all, the rating change didn’t provide investors with any new information. Moody’s was the third rating service to lower U.S. government bond ratings. S&P Global downgraded U.S. Treasuries in 2011,2 and Fitch Ratings followed suit in 2023.3
However, Moody’s decision focused attention on fiscal policy – the way the United States government taxes and spends.4 In 46 of the past 50 years, the U.S. government has run a deficit, meaning it has spent more than it received from taxes and other sources of revenue, reported FiscalData.5 Every annual deficit adds to the public debt, which is about $36 trillion, according to the U.S. Debt Clock.6
The U.S. government finances annual deficits (and the overall debt) by issuing Treasury bills, notes, and bonds. The U.S. promises Treasury buyers (a group that includes individuals, institutions, and governments) that it will pay interest for a specific period and then repay the amount borrowed.7
When yields increase, so does the amount of interest the United States must pay
When government bond buyers have concerns about a government’s fiscal policy, demand for bonds may fall and yields may rise. That happened to U.S. Treasuries last week. The yield on the 30-year U.S. Treasury bond exceeded five percent. “The move above 5 [percent] is striking because that has been the general cap on the 30-year for about two decades,” reported Karishma Vanjani of Barron’s.8
While higher yields make U.S. Treasuries more attractive to investors, they also may create challenges for economic growth. “As the national debt grows and interest rates rise, the United States will spend more of its budget on the cost of servicing that debt – crowding out opportunities to invest in the economy,” reported The Peter G. Peterson Foundation.9
The United States is already paying a hefty amount of interest. In 2024, interest payments on the U.S. debt were about $880 billion, more than the U.S. budget for national defense, reported Michael Mackenzie, Liz Capo McCormick, and Ye Xie of Bloomberg.10
The U.S. isn’t the only country where yields are rising. “From the U.S. to Japan, long-term borrowing costs for the world’s biggest economies have surged as investors question the ability of governments to cover massive budget deficits,” reported Alice Gledhill and Mia Glass of Bloomberg.11
Over the week, major U.S. stock indexes moved lower amid worries about rising yields and fiscal policy.12 Yields onlonger maturities of U.S. Treasuries finished the week higher.13
Data as of 5/23/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -2.6% | -1.3% | 10.2% | 13.5% | 14.2% | 10.7% |
| Dow Jones Global ex-U.S. Index | 0.8 | 11.4 | 8.9 | 7.1 | 8.1 | 2.7 |
| 10-year Treasury Note (yield only) | 4.5 | N/A | 4.5 | 2.9 | 0.7 | 2.1 |
| Gold (per ounce) | 5.0 | 28.0 | 41.8 | 21.7 | 14.2 | 10.9 |
| Bloomberg Commodity Index | 1.7 | 4.0 | -2.3 | -8.1 | 10.1 | 0.2 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
WHERE DO PEOPLE HAVE THE BEST QUALITY OF LIFE? Countries often measure success by comparing how much their economies produce. The United Nation’s Human Development Index (HDI) considers success from a different perspective by measuring quality of life. The index focuses on three fundamental aspects of human development: length of life, access to knowledge, and income.14
The 2025 HDI, which reflects data from 2023, showed that many wealthy nations (97 percent) have regained or improved on their pre-pandemic HDI scores, while just 60 percent of poorer nations have recovered, reported The Economist.15 The countries with the best quality of life were: 16
- Iceland,
- Norway and Switzerland (tied),
4. Denmark,
5. Germany and Sweden (tied).
The countries with the lowest quality of life were:
188. Niger and Mali (tied),
190. Chad,
191. Central African Republic,
192. Somalia, and
193. South Sudan.
The United States ranked 17th in the Index, tied with Liechtenstein and New Zealand. In 2023, U.S. life expectancy at birth was 79.3 years, and Americans could expect to complete about 15.9 years of school. U.S. gross national income – the total amount of money earned by people and businesses in the U.S. – per capita was $73,650.17 The ranking “puts the country in the Very High human development category,” stated the UN report.18
Weekly Focus – Think About It
“The true test of character is not how much we know how to do, but how we behave when we don’t know what to do.”19 – John Holt, Educator
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
[1] https://www.bloomberg.com/news/newsletters/2025-05-19/about-that-moody-s-downgrade? or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-27-25-Bloomberg-About-That-Moodys-Downgrade%20-%201.pdf
2 https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/sourceId/6802837
4 https://www.federalreserve.gov/faqs/money_12855.htm#:
5 https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/
7 https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/#:~:text
8 https://www.barrons.com/articles/global-bond-treasury-selloff-yields-7c33f4c1?mod=article_inline or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-27-25-Barrons-Global-Bond-Rout%20-%208.pdf
9 https://www.pgpf.org/our-national-debt/
10 https://www.bloomberg.com/news/articles/2025-05-21/treasury-yields-climb-auguring-5-rate-for-20-year-bond-auction or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-27-25-Bloomberg-Bond-Market-Warns-Trump%20-%2010.pdf
11 https://www.bloomberg.com/news/articles/2025-05-22/long-term-bond-yields-soar-globally-on-fiscal-policy-fears or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-27-25-Bloomberg-Long-Term-Bond-Yields%20-%2011.pdf
12 https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-27-25-Barrons-DJIA-S&P-Nasdaq%20-%2012.pdf
14 https://hdr.undp.org/data-center/human-development-index#/indicies/HDI
15 https://www.economist.com/graphic-detail/2025/05/06/which-countries-have-the-best-and-worst-living-standards or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-27-25-Economist-Which-Countries-Best-Worst-Living-Standards%20-%2015.pdf
16 https://hdr.undp.org/data-center/country-insights#/ranks
17 https://hdr.undp.org/data-center/documentation-and-downloads or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-27-25-Human-Development-Reports%20-%2017.pdf
18 https://hdr.undp.org/data-center/specific-country-data#/countries/USA
19 https://www.goodreads.com/quotes/49110-the-true-test-of-character-is-not-how-much-we
The Markets
Last week, the U.S. stock market showed why it’s a good idea to stay invested through bouts of volatility.
Major U.S. stock indices notched sizeable gains as investors celebrated a trade truce with China and better-than-expected inflation numbers,1 while brushing off a tepid consumer sentiment reading. Here’s what happened:
The administration negotiated a trade truce with China. The United States and China agreed to reduce tariffs for 90 days. U.S. tariffs on Chinese imports will fall to 30 percent, while China’s tariffs on U.S. imports will drop to 10 percent.2 The Wall Street Journal reported, “The agreement lowered tariff levels far more than Wall Street had expected, with one analyst…calling the deal a ‘best-case scenario’ for investors. Goldman Sachs cut its U.S. recession odds to 35 [percent] from 45 [percent] and boosted its growth forecast.”2
Inflation is closing in on the Federal Reserve’s target. Prices increased by 2.3 percent year over year in April. That put headline inflation just a smidge above the Fed’s two percent target. When the volatile categories of food and energy were excluded, prices were up 2.8 percent year over year.The price of eggs fell by 13 percent month to month leading a decline in the cost of food. Five of six major grocery store food group indexes moved lower in April.3
Consumers were concerned about inflation. While the Consumer Price Index’s April inflation numbers were encouraging,4 the inflation numbers in the University of Michigan’s Consumer Sentiment Survey were less so. “Year-ahead inflation expectations surged from 6.5 [percent] last month to 7.3 [percent] this month…Long-run inflation expectations lifted from 4.4 [percent] in April to 4.6 [percent] in May…,” reported Surveys of Consumers Director Joanne Hsu.5
The U.S. bond market was in a less cheerful mood than the U.S. stock market last week. On Friday, Moody’s lowered the rating for U.S. government bonds on concerns about the deficit (the difference between how much the government spends each year and how much it takes in through taxes) and rising interest costs.6 The rating service explained:
“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs. We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”6
Over the week, U.S. stock markets saw solid gains with the Standard & Poor’s 500 Index moving into positive territory for the year to date.1 U.S. Treasury yields ended the week near where they started.7
Data as of 5/16/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 5.3% | 1.3% | 12.5% | 14.1% | 15.1% | 10.8% |
| Dow Jones Global ex-U.S. Index | 1.6 | 10.5 | 7.3 | 7.8 | 8.2 | 2.6 |
| 10-year Treasury Note (yield only) | 4.4 | N/A | 4.4 | 2.9 | 0.7 | 2.2 |
| Gold (per ounce) | -4.3 | 21.9 | 33.9 | 20.7 | 12.9 | 10.0 |
| Bloomberg Commodity Index | -1.8 | 2.2 | -3.0 | -8.3 | 9.9 | -.4 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
WHAT DO YOU KNOW ABOUT MEMORIAL DAY? Memorial Day offers a blend of celebration and remembrance. It’s the time when we honor the men and women who bravely sacrificed their lives in service to the United States of America. The holiday reminds us that freedom is not free and gives us an opportunity to remember those who fought and died defending our country. See what you know about Memorial Day by taking this brief quiz.
- How do we remember the fallen on Memorial Day?8
- Flying the flag at half mast
- Participating in The National Moment of Remembrance
- Placing flags and flowers in cemeteries
- All of the above
- What type of flower is traditionally worn on Memorial Day?9
- A sunflower
- A poppy
- A chrysanthemum
- A rose
- The Medal of Honor is the United States’ highest award for military valor in action. More than 3,500 soldiers, sailors, airmen, guardians, marines, and coast guards have received the honor. How many double Medal of Honor recipients have there been?10
- 7
- 12
- 19
- 22
- Visitors to military cemeteries on Memorial Day may see coins on headstones. The type of coin left behind has significance. When a person leaves a nickel on the headstone of a service member, it means they:11
- Appreciate the veteran’s service
- Trained together at boot camp
- Served together
- Were there when the veteran died
How do you celebrate Memorial Day?
Weekly Focus – Think About It
“Heroism doesn’t always happen in a burst of glory. Sometimes small triumphs and large hearts change the course of history. Sometimes a chicken can save a man’s life.”12
– Mary Roach, Author
Answers: 1) d; 2) b; 3) c; 4) b
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
[1] https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-19-25-Barrons-DJIA-S&P-Nasdaq%20-%201.pdf
2 https://www.wsj.com/livecoverage/stock-market-today-tariffs-trade-war-05-12-2025 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-19-25-WSJ-US-China-Agree-to-Large-Tariff-Cuts%20-%202.pdf
3 https://www.bls.gov/news.release/pdf/cpi.pdf [report and Table 2]
5 https://www.sca.isr.umich.edu
6 https://ratings.moodys.com/ratings-news/443154
8 https://www.memorialdayfoundation.org/education/how-to-observe-memorial-day/
9 https://www.rd.com/article/memorial-day-poppies/
10 https://www.cmohs.org/recipients/lists/double-recipients
11 https://dma.mt.gov/MVAD/MVAD-Images/Coins-on-headstones-meaning.pdf
12 https://www.goodreads.com/quotes/7682393-heroism-doesn-t-always-happen-in-a-burst-of-glory-sometimes
The Markets
The winds of uncertainty are blowing, and the waters are choppy.
In recent weeks, United States stock markets saw steady gains, recovered from the April downturn as investors set aside uncertainty,” reported Connor Smith of Barron’s.1
Last week, investors became more cautious as they considered:
Trade successes and negotiations. Last week, President Trump announced a trade deal with the United Kingdom2 and, over the weekend, U.S.-China trade negotiations began. “With talks between the US and China about to start, trillions of dollars are hanging in the balance for American companies. The average member of the [Standard & Poor’s 500 Index] made 6.1% of its revenue from selling goods in China or to Chinese companies in 2024, according to an analysis from Bloomberg Intelligence’s Gina Martin Adams and Gillian Wolff,” reported Rita Nazareth of Bloomberg.3
The outlook for the economy. Last week, the Federal Reserve left rates unchanged. Fed Chair Jerome Powell offered assurances that the economy is solid, the unemployment rate remains low, and inflation is closer to the Fed’s two percent goal but not there yet. In a post meeting press conference, Powell stated,“…we’ve judged that the risks to higher employment and higher inflation have both risen [compared to March]…there’s a great deal of uncertainty…”4
The outlook for company earnings. Companies in the S&P 500 Index performed well in the first quarter. Overall, the earnings growth rate for companies that have reported so far is 13.4 percent, reported John Butters of Factset.5 However, as Butters explained, analysts lowered [earnings per share] estimates more than normal for S&P 500 companies because of uncertainty, including a possible economic slowdown or recession.6
Last week, major U.S. stock indexes finished flat to slightly lower.7 Yields on many maturities of U.S. Treasuries moved slightly higher over the week.8
Data as of 5/9/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -0.5% | -3.8% | 8.6% | 12.4% | 14.1% | 10.4% |
| Dow Jones Global ex-U.S. Index | 0.1 | 8.8 | 7.9 | 7.6 | 7.8 | 2.5 |
| 10-year Treasury Note (yield only) | 4.4 | N/A | 4.5 | 3.1 | 0.7 | 2.3 |
| Gold (per ounce) | 2.3 | 27.3 | 43.0 | 21.3 | 14.3 | 10.8 |
| Bloomberg Commodity Index | 1.3 | 4.1 | 0.3 | -6.3 | 10.7 | -0.1 |
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable
NO, YOU DON’T NEED TO STOCK UP ON TOILET PAPER. During the pandemic, concerns about supply chains and shortages led some people to stock up on items like toilet paper. As it turns out, the frenzied buying may have been the cause of those shortages.9
Today, people are concerned about items that are typically imported from other countries becoming scarce. Last week, Bloomberg published the “Ultimate Tariff Buying Guide” to help people understand “what to purchase right now, what to skip and what’s a maybe.”10 Claire Ballentine and Will Kubzansky of Bloomberg advised that “right now” purchases may include:
Kid stuff. A lot of the equipment parents rely on – car seats, strollers, cribs, toys – are made in China so prices may rise significantly.Parents don’t have to worry about disposable baby care items as “diapers, wipes and most infant formulas won’t see a huge impact from tariffs because the majority of these products are manufactured domestically.”10
Computers, smart phones, and electronics. While these goods currently are exempt from reciprocal tariffs, they are subject to other types of tariffs. If you have a student headed to college in the fall who will need electronics or you’re considering replacing your current smartphone, tablet, or computer, you may want to accelerate the purchase.10
Automobiles. “If you already planned to buy a car sometime in 2025, bringing your purchase forward a few months could save you thousands of dollars,” according to a source cited by Ballentine and Kubzansky.10
It’s a good idea to be prepared for higher costs if you’re planning to travel outside of the United States, too. “Due to tariffs shaking global markets, the [U.S.] dollar has weakened this year. That downward trend shows no signs of subsiding, so international travelers should expect worse deals when scoping out a trip or traveling abroad,” reported Ballentine and Kubzansky.10
Weekly Focus – Think About It
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained, you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”11–Sun Tzu, Military strategist
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
1 https://www.barrons.com/livecoverage/stock-market-today-05092025/card/the-market-had-a-banner-two-weeks-now-things-get-dicey–rHXi6aRToipIR0drAYQ2 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-12-25-Barrons-Market-Banner-Two-Weekds%20-%201.pdf
2https://www.whitehouse.gov/fact-sheets/2025/05/fact-sheet-u-s-uk-reach-historic-trade-deal/
3 https://www.bloomberg.com/news/articles/2025-05-08/stock-market-today-dow-s-p-live-updates?srnd=undefined or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-12-25-Bloomberg-S&P-500-Wavers%20-%203.pdf
4 https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20250507.pdf
7 https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-12-25-Barrons-DJIA-S&P-Nasdaq%20-%207.pdf
9 https://cnr.ncsu.edu/news/2020/05/coronavirus-toilet-paper-shortage/
[1]0 https://www.bloomberg.com/news/articles/2025-05-08/what-to-buy-before-tariffs-take-effect?embedded-checkout=true or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-12-25-Bloomberg-Ultimate-Tariff-Buying-Guide%20-%2010.pdf
The Markets
American companies did well in the first quarter.
During earnings season, publicly held companies tell investors how they performed during the previous quarter with a particular focus on earnings, which reflect company profits.
Currently, we’re more than halfway through earnings season, and companies in the Standard & Poor’s (S&P) 500 Index have reported solid performance results overall.1 “Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above their 10-year averages,” reported John Butters of FactSet.1
As of last Friday, 72 percent of S&P 500 companies had reported earnings, and the blended earnings growth rate was 12.8 percent. If earnings stay at this level, we will see a second consecutive quarter of double-digit earnings growth for the S&P 500, reported Butters. 2
While first quarter earnings were strong, it’s unclear whether future earnings growth will be as robust. “During the month of April, analysts lowered EPS [earnings-per-share] estimates for the second quarter by a larger margin than average…Analysts also continued to lower EPS estimates for [calendar year] 2025,” reported Butters.2
The reasons for changing expectations may be related to two words that have been popping up more than usual on earnings calls: “tariffs” and “uncertainty”.3
“Several companies noted that the uncertainty surrounding tariffs is making businesses hesitant about investment decisions. That means they are delaying stocking up on inventory (or in some cases, overstocking), hiring, and dealmaking,” reported Sabrina Escobar of Barron’s. “All the uncertainty has made it hard for companies to make accurate projections for the year ahead.”3
Last week, major U.S. stock indexes rose. “As of Friday, the S&P 500 index had risen nine days in a row, its longest streak since 2004. It jumped 10.2% in that span – 2.9% of that in the past week – a remarkable performance given the cloud of uncertainty hanging over American businesses,” reported Avi Salzman of Barron’s.4
Yields on most maturities of U.S. Treasuries moved higher over the week.5
Data as of 5/2/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 2.9% | -3.3% | 12.3% | 11.0% | 14.9% | 10.4% |
| Dow Jones Global ex-U.S. Index | 3.0 | 8.7 | 9.6 | 5.8 | 8.4 | 2.5 |
| 10-year Treasury Note (yield only) | 4.3 | N/A | 4.6 | 3.0 | 0.6 | 2.1 |
| Gold (per ounce) | -0.8 | 24.5 | 42.0 | 20.2 | 13.7 | 10.5 |
| Bloomberg Commodity Index | -1.1 | 2.7 | 0.6 | -7.7 | 10.7 | -0.2 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
HONEY, I SHRUNK THE ECONOMY! Last week, there were a lot of headlines about the U.S. economy after the Commerce Department shared information showing the U.S. economic expansion stuttered in the first quarter of this year. From January to March, the U.S. economy contracted, -0.3 percent annualized, as measured by gross domestic product (GDP) adjusted for inflation.6
The reasons for an economic contraction weren’t obvious. Many companies were doing well, and business investment was solid. Consumer spending slowed but remained healthy. Government spending dropped a bit, but the fly in the economic ointment was imports from other countries.6
“An enormous surge in imports was the big outlier in this GDP report. Normally, big increases in imports rarely coincide with outright declines in headline GDP because stronger imports usually mean more spending, not less,” reported a source cited by Megan Leonhardt and Matt Peterson of Barron’s.7
Why are imports part of U.S. productivity?
You may be scratching your head, wondering why imports – goods produced in other countries – are included when determining the value of all goods and services produced in the United States.8 The short answer is: They’re not.9
Broadly, U.S. GDP is measured by adding up:
- Personal consumption expenditures (consumer spending)
- Investment (business expenditures, household purchases of homes)
- Government spending (mandatory and discretionary)
- Exports (goods made in the U.S. and shipped elsewhere)
The final step is subtracting imports, which are goods that were made elsewhere. Imports are deducted because they’re in consumption, investment, and government spending numbers. To understand what was produced in the United States, imports must be subtracted.9 The St. Louis Federal Reserve offered an example of how that works.
“…if $10,000 in imported parts are used in the production of a car in a U.S. factory (an “American” car) and the car is sold in the United States for $30,000, then the $30,000 counts as personal consumption expenditures; but $10,000 is subtracted to account for the value of the imported parts, so the effect on U.S. GDP is $20,000.”9
The GDP report raised some interesting questions
The report about U.S. economic performance raised some questions that have yet to be answered. Why didn’t U.S. GDP reflect the purchase of imports? What happened to the imported goods? It’s possible the surge in imports was overestimated. It’s also possible spending and investment were underestimated, opined the source cited by Leonhardt and Peterson.7
We may have answers over the next two months. Last week’s report was the first estimate of economic growth, and it may have included data that was incomplete or will be updated. We’ll see two more estimates before the end of June.10
For now, it may be enough to know that first quarter GDP appears to reflect “the anticipated impact of tariffs rather than an actual downturn,” as Randall Forsyth of Barron’s reported.11
Weekly Focus – Think About It
“It’s funny: I always imagined when I was a kid that adults had some kind of inner toolbox full of shiny tools: the saw of discernment, the hammer of wisdom, the sandpaper of patience. But then when I grew up I found that life handed you these rusty bent old tools – friendships, prayer, conscience, honesty – and said ‘do the best you can with these, they will have to do’. And mostly, against all odds, they do.”12
– Anne Lamott, Author
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss. * Consult your financial professional before making any investment decision.
Sources:
[1] https://insight.factset.com/sp-500-earnings-season-update-may-2-2025
3 https://www.barrons.com/articles/tariffs-earnings-calls-stock-ccab0e3b or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-05-25-Barrons-CEOs-Are-Saying-These%20-%203.pdf
4 https://www.barrons.com/articles/stock-market-rally-risk-91fd1c10?refsec=the-trader&mod=topics_the-trader or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-05-25-Barrons-Stock-Market-Winning-Streak%20-%20%204.pdf
6 https://www.bea.gov/sites/default/files/2025-04/gdp1q25-adv.pdf [report, Table 1)
7 https://www.barrons.com/livecoverage/inflation-gdp-economy-pce-data/card/why-the-u-s-economy-isn-t-as-weak-as-it-looks-0WgAY8LrRIT8X8X3fZQ1 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-05-25-Barrons-Why-The-US-Economy-Isnt-as-Weak%20-%207.pdf
8 https://www.investopedia.com/terms/r/realgdp.asp
9 https://www.stlouisfed.org/publications/page-one-economics/2018/09/04/how-do-imports-affect-gdp
10 https://www.bea.gov/sites/default/files/2024-10/relia.pdf
11 https://www.barrons.com/articles/stock-market-economy-tariffs-0e9bf1d5?refsec=up-and-down-wall-street&mod=topics_up-and-down-wall-street or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/05-05-25-Barrons-Stocks-Are-Back%20-%2011.pdf
12 https://www.goodreads.com/quotes/159902-it-s-funny-i-always-imagined-when-i-was-a-kid